Wind Power Generation….as Fickle as the Weather!

US Wind Power Outfits Curse ‘El Niño’ for Massive & Mounting Losses

STT has likened it to the great corporate Ponzi schemes, pointing out, just once or twice, that the wind industry is little more than the most recent and elaborate effort to fleece gullible investors, in a list that dates back to “corporate investment classics”, like the South-Sea Bubble and Dutch tulip mania.

In the wind industry, the scam is all about pitching bogus projected returns (based on overblown wind “forecasts”) (see our posts here andhere and here and here); claiming that wind turbines will run for 25 years, without the need for so much as an oil change (see our posts hereand here and here); and telling investors that massive government mandated subsidy schemes will outlast religion (see our posts here andhere and here).

In Britain, Wind Prospect Group has stopped paying dividends to its bond holders and has prevented them from cashing them in to recover their capital outlay:

In Australia, one of the wind industry’s BIG players – Pacific Hydro – managed to rack up an annual loss of $700 million, last year; in circumstances where the subsidy scheme – on which its profits depend – hadn’t changed at all (see our post here).

Also in Australia, so-called ‘community wind farm’ operators have taken thousands for dupes, with wild claims about whopping profits to be had – all while ‘saving the planet’, of course:

At the heart of every great Ponzi scheme sits the “excuse”. Ploys, such as asking shareholders and creditors for “patience” – as the overblown, promised returns (surprise, surprise) fail to materialize.

And the scammers will happily toss up any other pitch capable of stalling those about to be fleeced, while the scheme’s organisers get ready to flee with their loot. The more scurrilous adding some gleeful touch to their pleas for ‘patience’, such as “don’t call us, we’ll call you”; or “the weather’s especially nice this time of year in [insert name of tropical paradise, with no Australian/American extradition treaty]”, say?

Over the last few months, the wind industry – facing calamitous financial results – has taken to blaming – of all things – the weather. Yep, that’s right it’s all the wind’s fault:

In America, US wind power outfits have taken to cursing El Niño – a naturally occurring phenomenon – that has seen winds slacken and losses mount among wind power outfits in the US. The delicious irony appears to be lost on the Neanderthals that people the wind industry, as this little article demonstrates.

The National Oceanic and Atmospheric Administration (NOAA) made it official last week. The current El Niño is classified as a strong event.

An El Niño falls into the “strong” category if weekly sea surface temperatures depart from the average by more than two degrees Celsius.

In fact, this El Niño has nudged ahead of the 1997 El Niño as the strongest in the modern era!

Meteorologists believe this occurrence is actually the most potent since 1948. And it’s expected to persist through winter and into spring.

Every El Niño’s effects are different. At the moment, this one is having a surprisingly negative effect on the wind power industry in the United States.

A Little Too Quiet

You see, this occurrence of El Niño has produced the weakest winds across the United States in 40 years. Forecasters say this situation will continue and may even worsen through the spring of 2016.

This might not seem like such a big deal, at first. Wind isn’t a huge part of our country’s power generation, right? Not so fast.

Wind is no longer just a mere marginal source of power for the electric industry. According to Bloomberg New Energy Finance, wind power installations in the United States surged 800% last year. Our country is now the second largest user of wind power technology, behind only China.

Wind accounted for 4.4% of U.S. power generation in 2014. That’s up from just 1.9% five years ago. In some states, wind makes up an even larger chunk of power generation. Wind provides nearly 10% of electricity production in Texas and 7% in California.

The overall effect of these calm conditions is that electric output from U.S. wind farms fell by 6% in the first half of this year. That happened despite wind power capacity rising by 9%.

Overall, U.S. wind farms operated at only about a third of their total generating capacity in the first half of 2015.

An Ill Wind for Some Utilities

The lack of wind has had very real effects on some utilities, and also on some yieldcos.

It’s a serious matter for these firms. The CEO of NRG Energy, David Crane, told analysts last month, “We never anticipated a drop-off in the wind resource as we have witnessed over the past six months.”

Even the rating agency Standard & Poor’s is weighing in. After downgrading some wind farm bonds, S&P stated, “Although our current expectation is that the wind resource will revert back to historical averages, at this time it is unclear when this will happen.”

It’s already been a tough 2015. Year to date, NEE is 10 % lower, PEGI fell 16.5%, DUK is down 18%, NEP fell 23%, NRG is down 31.5%, and NYLD is down a whopping 69%.

Of course, utilities have been hit by the rising interest rate expectations. But the lack of strong breezes in the United States has given a little tailwind to the downside for the wind power-related stocks.

Obviously, El Niño will eventually subside and wind patterns across the country will return to normal.

But until then, the wind power generation industry in the United States will continue to suffer. Shareholders in the wind-related yieldcos and utilities will continue to take a battering for an unknown amount of time.

Maybe they can somehow tap into the hot air generated by opponents of President Obama’s Clean Power Plan. They’re having a field day right now with the Plan’s heavy reliance on fickle breezes.

Good investing, Tim MaverickWall Street Daily

It’s a ‘fickle’ thing; to be sure. The picture above tells the woeful – weather driven – story of the performance during June 2015 of all wind farms connected to Australia’s Eastern Grid: with a combined capacity of 3,669MW – spanning 4 States and a geographical expanse of 632,755 km² – an area which is 2.75 times the combined area of England (130,395 km²) Scotland (78,387 km²) and Wales (20,761 km²) of 229,543 km². ‘Impressive’, don’t you think?

However, for the wind industry to air its dirty laundry in public demonstrates just how gormless these boys are.

You see, the whole subsidy-fuelled rort runs on “belief”.

“Belief” that a wholly weather dependent power generation source can provide meaningful electricity around the clock.

Until recently, the wind industry, its parasites and spruikers have maintained the line that the “wind is always blowing somewhere” and is, therefore, able to provide baseload power; “powering” millions of homes for “free”. The more deluded among them claiming that it can do so at prices even cheaper than the cheapest of all, coal-fired power (for a trip to fantasy-land tap into the nitwits over at ruin-economy).

But, now that bankers, investors and creditors have worked out that their debts and investments are in the hands of the Wind Gods – the scammers have been forced to come clean and admit that they have just about as much control over their financial situation, as they have over the weather. Funny about that.